Today it costs more to buy a Big Mac in developed countries than most emerging markets or less developed economies.
The last time we observed a similar phenomenon was in the early 2000s when emerging markets’ investments significantly outperformed developed markets.
One of the main reasons for this is that the performance of less developed economies often aligns closely with the commodities cycle, which tends to impact the strength of their currencies.
This alignment helps these countries cope better with inflation.
Additionally, their speed and aggressiveness in implementing policies to combat inflation, given the ongoing experience of less developed markets with constant upward pressure on consumer prices, tend to have a major positive impact on their currencies relative to more developed economies.